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Weekly Review | Feb 6 to Feb 13

Market Indices

Index	Feb 6, 2012	Feb 13, 2012	Change	Percent
DJIA	12799.11	12949.87	150.76	+1.18
Nasdaq	2926.21	2951.78	25.57	+0.87
S&P500	1343.06	1361.23	18.17	+1.35
Russell 2000	820.00	828.68	8.68	+1.06
Russell 1000	632.66	638.82	6.16	+0.97

Equity Review

U.S. stocks finished higher last week with gains for the week.  The Dow Jones closed up 1.2% at 12,949.87 for the week ended February 17.  The S&P 500 closed up 1.4% at 1,361.23.  S&P 500 component Dentsply International reported fourth quarter results.  The dental equipment manufacturer said net income fell to $40.6 million or $0.51 per share, short of the $0.52 estimate.  The company said, “Looking ahead to 2012, we expect continued improvement in many of our key markets, despite economic volatility in Europe.  Given these factors, we expect adjusted earnings to improve in 2012.”  General Motors Company also reported results for the fourth quarter.  The auto manufacturer announced that net income fell to $472 million or $0.40 per share, falling short of the $0.42 estimate.  GM’s CEO stated, “We will build on our 2011 results as we bring more new cars, crossovers and trucks to market, and make GM a far more efficient global team.”  CBS Corporation reported earnings above Wall Street’s expectations for the fourth quarter.  Net income for the broadcasting company rose to $370 million or $0.57 per share.  This marks a rise of 30.7% from one year ago.  The company beat the estimate of $0.53 per share.  Management said, “CBS’s strategy of producing and distributing industry-leading content around the world and across multiple platforms continues to pay off.”  Zynga reported its fourth quarter earnings; the first report since the public offering in December.  Net income was $37 million or $0.05 per share.  However, the company did see a loss of $435 million from a $510 million expense from stock-based compensation.  The company noted that its user base and those users paying for virtual goods rose but costs jumped on expanded game developments.  The stock price dropped almost ten percent following the announcement. This week is a short week due to the President’s Day holiday.  Analysts say the market is hanging on what goes on in Greece. 

Economic Indicators

Economic Review

The Commerce Department reported that U.S. retail sales rose 0.4% in January, the most in four months.  Consumers increased spending at department store chains, bars and restaurants.  The number was short of the 1.0% forecast, mainly due to lower automobile sales.  Consumer spending accounts for 70% of U.S. growth, so any increase in retail sales is encouraging.  Last week unemployment claims fell to their lowest level in almost four years.  The Labor Department reported that jobless claims decreased by 13,000 to 348,000 in the week ended February 11.  Economists estimated that claims would rise to 368,000.  The four week average dropped by 1,750 to 365,250.  The downward trend in claims, along with recent positive economic reports reinforces the fact that the labor market is recovering.  U.S. wholesale prices were up in January due to higher costs of pharmaceutical drugs; however, food and fuel prices fell.  The producer price index rose 0.1%.  Economists had forecast a 0.5% increase because of higher gasoline costs.  With gas prices rising at the pump for the first time in four months, U.S. consumer prices increased in January, the most since September.  Due to oil issues in the Middle East, the price of oil increasing and refinery problems in the U.S., the cost of gas at the pump is expected to average at $5.00 per gallon by Memorial Day.  Meanwhile, the consumer price index rose to 0.2%, just below the 0.3% consensus.  New construction of U.S houses rose in January by 1.5% to 699,000 annually.  Economists had predicted 688,000.  Analysts say despite some gains, housing data remains at relatively low levels, and the market faces a lengthy recovery.  On Friday, the U.S. House and Senate voted to extend a two-percentage point payroll tax cut for the remainder of 2012.  The bill will extend the current 4.2% payroll tax through the end of the year as well as prolong jobless benefits and prevent payment cuts for Medicare doctors.